WA vineyards saved wineries in British Columbia. Now a future deal is up in the air
Published in All About Wine
When a deep freeze devastated British Columbia’s grape crops last year, winemakers across the border leaned on imports, particularly from Washington grape growers. A tax-free import agreement for 2024 vintage made that collaboration even more attractive.
Now, with the 2025 harvest on the horizon, a new exemption remains uncertain as it awaits a decision from British Columbia’s Ministry of Agriculture and Food. Meanwhile, rising global trade tensions are worrying some that a new exemption might be unlikely.
Marcus Miller, president of Airfield Estates Winery, said his first thought when he heard that the exemption might not be renewed was: “Oh man, that’s a big bummer.”
Around 10% to 15% of Miller’s harvest in the Yakima Valley, which is about $300,000 to $400,000 worth of product, went to B.C. last year. Miller, as well as grape growers and winemakers on both sides of the border, are eager to know before this year's harvest season if they’ll be able to continue to trade tax-free.
The exemption, which eliminates the markup on wine bottles produced with non-British Columbian grapes or juice, has been mutually beneficial.
On the Canadian side, replanted vineyards will take another couple of years to produce a full harvest, so an extension is critical.
In Washington, the opportunity opened up a new market for Washington’s large grape growing industry burdened with oversupply as a result of an overall decline in wine consumption. Washington’s wine grape production totaled 150,000 tons last year, according to data from the Washington Wine Commission. Of that production, about 2.5%, was sold to customers in British Columbia.
“To know that door is likely going to shut is frustrating because it’s a win-win on both sides of the border,” Miller said.
'A real opportunity to collaborate'
In January 2024, temperatures in the Okanagan-Similkameen region dropped to minus 4 degrees Fahrenheit for several days, devastating vineyards across British Columbia.
The freeze led to the loss of 90% of grape production, according to a report from the British Columbia government.
B.C. wineries scrambled. Bottles made with grapes and juice from outside the province had a wholesale markup that could turn a "$20 bottle into a $35 one,” according to Craig Pacheco, a Seattle wine attorney who advocated for the exemption and helped connect Canadian wineries with U.S. growers.
By July 2024, the Canadian province had decided. It would eliminate the markup for one year to “support job security within the industry and ensure the continued availability of B.C.-produced wines,” it said in a memo.
The collaboration saved around 3,000 jobs and protected almost $200 million in revenue, according to Jeff Guignard, CEO of Wine Growers British Columbia.
If the exemption is not extended to cover this year’s vintage, 1,800 jobs and about $100 million in revenue could be lost, he said.
Vineyards across B.C. have been replanting this year, slowly. Grape vines typically take at least three years to mature, which likely leaves the province producing only half of what it needs this year, Guignard said.
Grape harvesting starts next month in both Washington and B.C. If a decision isn’t made soon, Guignard said, layoffs will begin, and there will be “serious negative consequences” on the B.C. industry.
A statement from the B.C. Liquor Distribution Branch on Thursday said the organization was still examining the needs of the industry for the 2025 growing season.
“No decision has been made at this time,” the statement reads.
Trade tensions may also affect this decision, Guignard said, as some government officials “may not like the optics of bringing in grapes from a country they are in a trade war with.”
Regardless of the broader politics, Guignard remains steadfast that the relationships between U.S. and Canadian wine industries remain in good spirits.
Still, Canadian stores have been pulling U.S. alcohol from their shelves. Canada is the U.S. wineries’ top export market, but it has also placed a 25% tariff on American wine in response to the 25% tariffs on steel and aluminum the U.S. placed on Canada which was increased to 35% last week.
Miller, with Airfield Estates, said he was preparing to sell bottles to Ontario this year, but he decided to instead sell them domestically due to the trade instability.
“Once the relationship went that direction I don’t think any of those wines made it on the shelf in Canada,” Miller said. “There was hope that things would open up but at this point we’re moving on.”
'I would be bringing it in every year'
For B.C. winemakers, Washington grapes offer a bridge to support their production while vineyard replanting bears fruit.
Ron Kubek, of B.C.-based winery Lightning Rock, was one vineyard owner who bought Washington grapes. He brought in around 52 tons of imported grapes from Washington to replace the losses across his nearly 17-acre vineyard.
“You’ve got vineyards in Washington that have more (acreage) than all of B.C. (vineyards) combined,” Kubek said. “Washington state fruit, if I could get it without having to worry about the markup, I would be bringing it in every year because it is wonderful fruit, it’s wonderful growers.”
Kubek is now replanting a good chunk of his vineyard, about 10 acres, which cost him less than $5,000 an acre to redo.
In total, an estimated 5,579 to 10,233 vineyard acres needed replanting after the freeze, according to an analysis provided to the B.C. Ministry of Agriculture and Food.
The Canadian government started a replant program, but Kubek decided to opt out and plant on his own.
Lightning Rock wine, created with Washington grapes, was a big hit, Kubek said, and it won a couple of awards in the U.S. He’s had guests visit his winery from Montana, Oregon, California and Texas, among other spots across the U.S., and feels the cross-border partnership is a great program.
“I’m hoping that the B.C. government realizes if you want to support a $3.75 billion industry that was devastated with no fruit last year then we need to be able to buy from our neighbors,” Kubek said.
'Underdemand and oversupply'
Kristina Kelley, executive director at the Washington State Wine Commission, called the potential ending of the exemption a "disappointment.
“We had a lot of people working on this initiative,” Kelley said. “It’s sad seeing it slightly at risk and we’re disappointed because it was a real opportunity for us to collaborate with wineries within B.C.”
Washington is the second-largest wine producer in the nation, with more than 400 annual grape growers and over 50,000 acres of wine grapes. The industry contributes an estimated $10.56 billion to the state’s economy each year, according to data from the Washington State Wine Commission.
Sara Higgins, executive director of the Washington Winegrowers Association, said Washington continues to “be in a state of underdemand and oversupply.”
Washington's wine production decreased about 5% in 2024 from the year prior which Kelley said is due to growers trying to balance out supply and demand.
In 2023, Ste. Michelle Wine Estates, Washington’s largest winemaker, slashed 40% of its grape buying contracts, hitting vineyards across the state and forcing growers to search for other markets or downsize production.
The downturn in wine sales is a result of myriad factors, including a flooded market of wine and spirit products, a generational shift in drinking habits and concerns over health.
Across the nation, alcohol consumption has been slowly declining — especially among Generation Z and millennials. A survey of 1,062, Americans done by advertising and consumer analysis agency NC Solutions in January, found that nearly half of the people surveyed, 49%, planned to drink less alcohol this year, compared with 34% in 2023.
Movements like “Dry January” and “Sober October” have become more popular and contributed to the decreasing numbers, Kelley said.
Across the state, she said vineyards are finding creative solutions to pull in consumers, including offering lower alcohol content, creative packaging and expanding markets.
Washington exports wine to 72 countries, Kelley said, including Japan, Korea and the United Kingdom, but Canada is the largest foreign importer. Exports make for 5% to 6% of the wine industry’s total production.
While Kelley may be disappointed about this latest turn of events, she said the wine industry is about long-term relationships, and that there always have ups and downs.
Washington doesn’t rely on B.C. to survive, she said, but it's presented a great opportunity for Washington growers.
Kelley has urged the Washington State Department of Agriculture to push for the exemption to be extended, but said she probably won’t know what will happen for another couple of weeks.
In the meantime, with harvesting season right around the corner, wine growers and producers on both sides of the border are eager to hear an answer.
“Now that we’re in August, I guess I should’ve started getting antsy about it but I just knew that the Canadians would rather not renew,” Miller said. “But I figured it would be a late decision again.”
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